Property Bulletin: Central Bank 'doing nothing to stop banks fleecing homeowners'
Published 18/07/2015 | 02:30
A report from the Central Bank on low levels of mortgage switching has been dismissed as a "smokescreen".
Consumer rights campaigner Brendan Burgess accused the Central Bank of trying to divert attention from the fact that regulators were doing nothing to protect consumers on variable rates from being fleeced by banks.
His comments came as Finance Minister Michael Noonan said variable mortgage rates were too high.
Mr Noonan said mortgage holders should find out if they could get a better deal by switching lenders.
An academic paper produced by the Central Bank found that more than 100,000 people on expensive variable rates could shave hundreds of euro off their mortgage repayments by switching their home-loans to another lender.
Large-scale switching would force all banks to lower their variable rates. But it found that just 38 homeowners a month were switching.
However, Mr Burgess of the Fair Mortgage Rates campaign said the Central Bank was attempting to blame borrowers for high variable rates.
"The reality is that the banks are charging high variable rates because there is no competition in the Irish market and because the Central Bank is doing nothing to protect consumers from being fleeced by the banks," he said.
Customers were very much prepared to shop around when there was an advantage to be gained, he said.
Back in 2005, 26,000 customers changed lender because they could switch from variable rate mortgages to cheap trackers. In 2014, 500 customers switched.
"The Central Bank report is a smokescreen to divert attention from the real problems in the Irish mortgage market," claimed Mr Burgess. This problem was that variable rates were too high.
Central Bank governor Patrick Honohan has repeatedly said he does not want powers to force banks to lower their variable rates.
But Mr Noonan said the Central Bank report was useful and welcome. He said work on the report had started before he began his round of discussions with the banks.
"What I would advise people with mortgages to do is to engage with their lender and examine all the options and see is there an option that significantly reduces their repayments."
He said there were quite significant savings to be made.
He thought it was quite clear the bottom of the interest rate cycle was approaching.
"It's bottoming out, and if one is thinking of fixing, well obviously you're better off fixing as near to the bottom as you can get, rather than when interest rates go back up again."
Mr Noonan will meet the banks again in September.